Here's the Raymond James reportLAKE SHORE GOLD CORP. (LSG-T, $1.64)
Recommendation Update
Stock Price $1.64
Stock Rating STRONG BUY 1
6-12 Month Target $3.75
Target Total Return 129%
Market Capitalization (mln) $155
4-Week MA Daily Volume 91,443
NAV per Share $3.39
Premium to NAV -52%
Working Capital per Share $0.22
Shares Outstanding (mln) 94.4
Fully Diluted (mln) 101.0
Timmins West Resources:
Indicated (uncut) 1.369MT 16.45g/T
Indicated (cut) 10.96g/T
Inferred (uncut) 0.2MT 12.43g/T
Inferred (cut) 8.70g/T
All figures in C$ unless otherwise noted.
We are emphasizing our STRONG BUY rating and $3.75 price target on
Lake Shore Gold. The target is the product of a $3.39 NAVPS estimate and a
1.1 times P/NAV multiple and generates a 129% projected return. The stock
has been hit hard through the recent mining equity correction, losing 41%
since the end of April or 16% since early July. The company has a great deal
ongoing, with an advanced project and multiple early-stage drill programs
but investors are impatient with some selling into rallies. The company's
main focus is on the venerable Timmins, Ontario gold camp. Despite minor
technical setbacks, quite normal for deep drilling, the company will be
able to complete the resource drilling program for the Timmins West project
by the end of August. Brutal waiting times (up to 12 weeks) for assays from
labs will likely delay the release of a new resource estimate for Timmins
West to 4Q06. A September 2004 resource estimate outlined 1,369,000
tonnes indicated grading 16.45g/T gold (724,000 ounces) on an uncut basis or
10.96g/T gold (482,000 ounces) on a cut basis. We foresee an
approximate doubling of this resource. Ongoing drilling at Vogel-Schumacher
includes geotechnical work in preparation for a decline access as well as
exploration. We now expect a prefeasibility study for the combined Timmins
West and Vogel-Schumacher project by 1Q07. We believe that the two
potential mines could yield 165,000 and 125,000 ounces annually,
respectively. Over the next two months, we should hear of drill results
from the Timmins West, Vogel-Schumacher and Blakelock projects with drills
turning in 4Q06 on Vogel-Schumacher, DeSantis, Thunder Creek and,
potentially, Noranda North. We consider the company to be an excellent
candidate for acquisition by companies seeking high-grade ounces in the
low-risk but millfeed-starved Timmins jurisdiction.